Ultragenyx Pharmaceutical(RARE) - 2022 Q4 - Annual Report

Financial Performance - For the year ended December 31, 2022, the total revenues increased to $363.3 million, compared to $351.4 million for the same period in 2021, representing a growth of approximately 3%[388] - The net losses for the years ended December 31, 2022 and 2021 were $707.4 million and $454.0 million, respectively, indicating an increase in net losses of approximately 56% year-over-year[387] - For the year ended December 31, 2022, total revenues increased by $11.9 million, or 3%, to $363.3 million compared to $351.4 million in 2021[422] - Interest income increased by $9.1 million to $11.1 million for the year ended December 31, 2022, representing a 474% increase compared to 2021[433] - The provision for income taxes increased by $4.7 million to $5.7 million, a 446% increase due to changes in tax law and significant taxable income from royalty sales[439] Cash and Investments - As of December 31, 2022, the company had $896.7 million in available cash, cash equivalents, and marketable debt securities[389] - Cash used in operating activities was $380.5 million for 2022, reflecting a net loss of $707.4 million[445] - Cash used in investing activities totaled $291.7 million, primarily for property, plant, and equipment purchases of $116.1 million and the acquisition of GeneTx for $75.0 million[447] - Cash provided by financing activities was $501.2 million, mainly from $491.0 million in net proceeds from the sale of future royalties[449] - The company has not experienced a loss of principal on any of its investments as of December 31, 2022[457] Revenue Sources - The increase in total revenues was driven by higher collaboration revenue from Crysvita and an increase in revenue from approved products, partially offset by a decrease in collaboration and license revenue from the Daiichi Sankyo arrangement[388] - Crysvita collaboration revenue in profit-share territory increased by $43.8 million, or 26%, to $215.0 million in 2022, driven by increased demand due to a higher number of patients on therapy[422] - Total product sales rose by $41.9 million, or 54%, to $118.9 million, primarily due to increased demand for Crysvita and the commercial launch of Dojolvi in the U.S.[424] - The increase in Crysvita non-cash collaboration royalty revenue was $3.7 million, or 21%, attributed to launch progress in European countries[425] - The collaboration and license revenue from Daiichi Sankyo decreased by $77.3 million, or 91%, due to the completion of technology transfer[423] Expenses - Research and development expenses increased by $208.6 million, or 42%, to $705.8 million, attributed to higher costs in clinical trials and personnel allocations[429] - Selling, general and administrative expenses decreased by $58.2 million, or 26%, to $220.0 million, mainly due to increased personnel costs and commercialization expenses[431] - Cost of sales increased by $12.3 million, or 77%, to $28.3 million, reflecting higher demand for approved products and amortization of intangible assets[426] Strategic Initiatives - The company’s strategy focuses on time- and cost-efficient drug development to deliver safe and effective therapies to patients urgently[384] - The company is constructing its own GMP gene therapy manufacturing plant to support product candidates[456] - Future milestone payments based on product development success are uncertain and described in the financial statements[455] Risks and Future Outlook - The company anticipates continued annual losses as it develops and seeks regulatory approvals for product candidates[451] - Future funding requirements will depend on various factors, including the success of clinical studies and the ability to raise additional capital[452] - The impact of the COVID-19 pandemic on business operations and results is a significant risk factor for the company[456] - The company faces foreign exchange risk due to transactions in currencies other than U.S. dollars, which may negatively affect revenue and operating income[458] Royalty Agreements - In December 2019, the company entered into a Royalty Purchase Agreement with RPI, receiving $320.0 million for future royalty payments on Crysvita sales, with a capped amount of $608.0 million[406] - In July 2022, the company entered into a Royalty Purchase Agreement with OMERS, receiving $500.0 million for 30% of future royalty payments from Crysvita sales, with a cap of $725.0 million[407] - The effective annual interest rate for the liabilities related to the Royalty Purchase Agreements was approximately 9.3% for RPI and 8.4% for OMERS as of December 31, 2022[409] Tax and Valuation - The company recorded a deferred tax asset of $900.7 million, fully offset by a valuation allowance due to uncertainties in generating future taxable income[420] - A hypothetical 100 basis point change in interest rates would not have had a material impact on the fair market value of the company's cash equivalents and marketable debt securities[457] - The fair value of equity investments decreased by $19.3 million in 2022, a 54% improvement from a $42.1 million decrease in 2021[434][435] Other Financial Information - As of December 31, 2022, total unrecognized stock-based compensation costs were $229.4 million, expected to be recognized over a weighted-average period of 2.28 years[416] - Non-cash interest expense on liabilities for sales of future royalties rose by $13.6 million to $43.0 million, a 46% increase year-over-year[437]